The upper line shows where bulls run out of steam; the lower line shows where bears become exhausted. So a rectangle shows that bulls and bears are evenly matched.

Rectangle patterns are also known as Trading Ranges, Consolidation Patterns, Flat Base and a Sideways Pattern.

Rectangles can can extend for a few weeks or many months.

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Breakout Trading: If share volume swells when price approaches the upper border, an upside breakout is more likely. Visa Versa on the downside.

A valid breakout from a rectangle is confirmed by large increase in volume; one-third to one-half higher than the average of the previous five days. If volume is thin, it is likely to be a false breakout.